Pick Top Stocks For 2019, Best Stocks For 2019

Tag Archives: BEP

Gold prices have been all over the place in the past one year, but some gold stocks have moved in only one direction: south. As of this writing, Canada-based gold miner Eldorado Gold (NYSE:EGO) is down a whopping 66% in one year. South African miner Sibanye-Stillwater (NYSE:SBGL) is swiftly closing in, having shed as much as half its value with the bulk of the decline coming in just the past couple of months. Among the larger gold miners, Kinross Gold (NYSE:KGC) is down about 11% in one year, or 15% year to date.

Are any of these gold stocks worth buying now? A case-by-case analysis should help you decide.

Personally, I think dividend investors will get the best bang for their buck from a dividend stock with companies that can offer a rather generous yield an maintain a reasonable growth rate. For a company to be able to achieve these two things over the long haul, it needs to have a business model that has quite a bit of clarity several years out, and a management team with a proven track record of capital allocation. Brookfield Renewable Partners checks every one of these boxes.

Brookfield Renewable owns and operates about $25 billion in power-generating assets globally, most of which are hydropower stations. The assets it owns have contracts in place that give an immense amount of revenue clarity for several years into the future. Being able to project revenue with such certainty allows Brookfield to distribute such a large portion of its cash to shareholders in the form of a dividend currently yielding 6.6%.

Having assets that throw off a lot of cash isn’t that uncommon, though. What’s rare is a management team like Brookfield’s that can effectively manage the growth of the business when so much cash is dedicated to investors. One thing that Brookfield’s management has proven to be quite adept at is sniffing out undervalued investments and buying them at discounted or distressed rates. Examples were when it bought hydropower stations in Colombia at an auction where it was the only participant as well as the acquisition of TerraForm Global when its former parent, SunEdison, was in bankruptcy proceedings. Buying assets when they are out of favor has led to higher rates of return.

This formula, coupled with prudent management of the balance sheet, has worked exceptionally well for the company as it has outpaced the S&P 500 on a total return basis by a wide margin. As long as Brookfield sticks to this strategy, its stock should continue to reward investors for a long time.

Enterprise Products Partners came public nearly 20 years ago to little fanfare. The master limited partnership (MLP) raised a little under $250 million at the time to fund development projects and acquisitions. That seed money jump-started the company’s growth journey, which has seen it become an energy infrastructure powerhouse over the years. As a result, initial investors have done quite well. Overall, Enterprise has generated a total return of more than 1,730%, which would have turned a $5,000 investment at its IPO into more than $86,500. For comparison’s sake, the S&P 500’s total return over that time frame is 268%, which would have turned $5,000 into just $13,400.

A main driver of that return has been Enterprise’s spectacular ability to increase its distribution to investors. Since its IPO, the MLP has increased its payout 64 times, including in each of the last 55 consecutive quarters. That growing income stream has generated the lion’s share of the company’s total return.

While Enterprise Products Partners might not repeat that performance over the next 20 years, it still has plenty left in the tank. The company recently put the finishing touches on $5.3 billion of growth projects and has another $4.9 billion under construction. Those expansions should fuel continued distribution increases so that it can create more value for investors in the coming years.

Hot Safest Stocks To Watch Right Now: Exxon Mobil Corporation(XOM)

ExxonMobil is one of the world’s largest integrated energy giants. It produces oil and natural gas on the upstream side of its business and chemicals and refined products on the downstream side. This helps to even out its performance when energy prices are volatile — a fairly common condition. This balanced model also speaks to the highly conservative culture of the energy giant, which is further highlighted by its impressive 36-year streak of annual dividend increases and its low debt level. (Long-term debt is just 10% of the capital structure.)

That conservatism, however, can leave it flat-footed when markets are moving quickly. That’s exactly what’s happening right now. ExxonMobil started pulling back on capital spending during the deep oil downturn that started in mid-2014, and has been late to hit the accelerator now that crude prices have recovered. For example, first-quarter earnings were up roughly 15% year over year, but many of its integrated peers have been doing better. For example, Royal Dutch Shell, which made a huge acquisition during the downturn, saw Q1 earnings advance nearly 63%.

Another key problem is that ExxonMobil’s production has been weak: It fell slightly in each of the last two years, and did so again, year over year, in Q1. Recently, the Motley Fool’s Tyler Crowe described Exxon as "testing" its investors — and that situation isn’t likely to end for a couple of years, as the company’s large growth projects aren’t expected to add materially to its revenues or profits until 2020. In the meantime, investors get to watch capital spending rise with little return on that investment.

XOM PRICE TO TANGIBLE BOOK VALUE DATA BY YCHARTS

It’s no wonder, then, that ExxonMobil’s dividend yield is on the high side of its historical range at around 4%. And the company’s tangible book value is lower than it has been since the late 1980s. Don’t expect a quick turnaround, either, as large projects in Guyana, Brazil, and Mozambique, among other locations, will take time to develop. But once they are up and running — they’ll account for roughly half of the energy giant’s upstream earnings by 2025 — investors will likely reward ExxonMobil stock with a higher valuation. It is also working on large new downstream projects that will help to boost results, but they too are a few years from completion.

While these long-term plans play out, however, patient investors can collect large yields backed by a growing dividend at a conservative energy company. That’s a worthwhile trade-off in my opinion.

Hot Safest Stocks To Watch Right Now: Buckeye Partners L.P.(BPL)

Buckeye Partners is a relatively small midstream energy limited partnership, and a more aggressive play for investors. The partnership’s core assets are pipelines and storage. It differentiates itself from many of its peers because it has a truly international presence, with storage assets located in the Caribbean, Europe, Asia, and the Middle East. The problem is that Buckeye’s distribution coverage ratio has been notably weak, falling to just 1 in 2017. Investors are worried that the partnership’s current round of capital spending will compel it to cut the distribution.

That’s not an unreasonable expectation. However, management has steadfastly continued to assert that it will support the dividend. As recently as June 5, they stated: "Given our current outlook, we have no intentions of cutting Buckeye’s distribution." And a cut would likely be a last-resort move, given that the partnership has increased its distribution annually for 22 consecutive years. Moreover, management has taken the long view before, letting the coverage ratio fall below 1 in 2013 and 2014 while it waited for investments to bear fruit.

BPL FINANCIAL DEBT TO EBITDA (TTM) DATA BY YCHARTS

The partnership is also fairly conservative financially, with a debt-to-EBITDA ratio of around 4.9, which isn’t particularly out of line with its midstream peers or its own history. However, the fear of a distribution cut is a big headwind in an asset class that’s specifically designed to push income through to unit holders, which is why Buckeye’s distribution yield is a massive 14% today.

The partnership doesn’t expect to issue any new units through the end of 2019, which would make it even harder to cover distributions. Although the recent use of hybrid debt and issuance of a new class of units that have a payment in kind distribution (which temporarily allows the partnership to avoid cash distributions on the units) suggests Buckeye is getting aggressive in order to raise non-dilutive cash, management believes that it still has plenty of financing options available should it need additional funds. Buckeye is openly calling 2018 a transition year, with major projects, like expansions in Texas, Chicago, and Michigan/Ohio, not expected to add materially to the top or bottom lines until 2019 or 2020.

If you can take the long view along with management, Buckeye’s huge yield is worth the risk for investors who can handle a little uncertainty. When coverage picks back up, the market is likely to push the unit price higher.

President Donald Trump’s decision to pull out of the Iran nuclear deal has pushed crude oil back above the $71-a-barrel threshold on fears the impact of economic sanctions (to say nothing of the threat of a military confrontation) on the output of Iranian crude into the marketplace.

Adding to the tailwind for energy markets was a surprise inventory drawdown despite soaring U.S. shale production.

This is a perfect combination for embattled U.S. producers. Prices are rising. OPEC is continuing to hold output down amid an ongoing effort to push up prices. And the possible prevention of Iranian oil coming to market is set to reduce market share.

A number of smaller U.S. oil and gas players are set to be the big winners in all this. Here are seven ready to move higher quickly.

When investors are looking at the energy industry today, there’s a lot to consider. Volatile oil prices can make big oil stocks risky, changing utility markets have hurt formerly safe utility companies, and even natural gas isn’t the profitable business it once was. But renewable-energy production around the world is growing, and companies that own renewable assets can generate consistent cash flows capable of funding dividend growth for years to come.

One of the best dividends for in-the-know investors is Brookfield Renewable Partners, a yieldco that owns 16,000 megawatts of generating capacity around the world. Eighty percent of that capacity is hydropower, but the company is adding more wind and solar assets after acquiring a 31% interest in TerraForm Global and a 16% interest in TerraForm Power (NASDAQ:TERP).

What’s unique about Brookfield Renewable Partners is that it’s not as tied to the idea of issuing stock to fund acquisitions as many yieldcos have been in the past. Instead, it expects to grow its dividend 5% to 9% annually and use any excess cash from the business to grow cash flow organically. If you look at the dividend over the past decade, you can see that the strategy has resulted in steady growth:

Energy markets can be volatile, but a renewable-energy company like Brookfield Renewable Partners usually buys projects backed with long-term contracts to sell energy to utilities under a set rate. Yieldcos that can do that well will be big winners for investors, and that’s why Brookfield Renewable Partners is a great dividend stock today.

Hot Bank Stocks To Buy For 2019: Intel Corporation(INTC)

Source: Shutterstock

Over the past year, Intel Corporation (NASDAQ:INTC) has turned its business around from a computer-centric company to a data-centric company. That transition has played out almost perfectly, and INTC stock up more than 45% over the past year.

These gains will continue.

Intel stock has been weighed by Apple-related issues recently. Namely, weak iPhone demand as well as Apple moving away from Intel as a chip supplier for certain products.

But such concerns are rather meaningless in the big picture. As was the case with MU, Intel’s growth narrative is all about cloud data-centers and IoT devices. These markets are massive and only growing. Thus, so long as demand remains robust in those markets, iPhone-related weakness is largely meaningless.

Right now, demand in those markets isn’t showing any signs of wavering. INTC just reported really strong quarterly numbers, led by strength in data-centers (revenues +24%) and IoT (revenues +17%).

Meanwhile, INTC stock remains pretty cheap considering its exposure to big secular growth markets. The stock trades at under 14-times forward earnings. That is dirt cheap for a stock of Intel’s nature.

Consequently, this red-hot chip stock could stay hot for a lot longer. The bull thesis continues to gain momentum as the data-centric business pivot continues to yield materially positive results. Meanwhile, downside is protected by a relatively cheap valuation. Mitigated risk with a strong bull thesis is a healthy backdrop for this stock to keep heading higher.

Lately, on Industry Focus: Tech, we’ve focused on the megacap businesses that have been dominating the news — at the cost of shedding some light on smaller companies with massive growth potential. In this week’s episode, host Dylan Lewis talks with Fool.com contributor Brian Feroldi about following ultra-compelling small-cap tech companies.

Tune in to find out how each business works, how companies like AppFolio thrive in markets that are too small for the big guys, the biggest risks investors should know before taking a closer look at these companies, which particular one is the most exciting story today, and more.

Top 5 Tech Stocks For 2018: The Goodyear Tire & Rubber Company(GT)

You’ve likely heard new-vehicle sales in the U.S. are currently plateauing, which makes it difficult to sell a near-term growth story for automakers. Nonetheless, the auto industry has trends that could provide strong growth for Goodyear despite the company’s being sold off with the rest of the industry — it currently trades at a paltry forward P/E of 6.6, per Morningstar estimates.

Total sales are plateauing, but the sales mix is wildly shifting in favor of larger vehicles such as SUVs, crossovers, and pickup trucks. That means more larger tires on the road, and that means better margins for Goodyear. In 2009, light trucks were 45% of the U.S. new vehicle market; that exploded in the years since to 68% during the first quarter of 2018. Further, LMC Automotive predicts light trucks will generate roughly 73% of the market as soon as 2022.

A sales mix in the Americas with such a large percentage of light trucks is one growth catalyst for Goodyear, but there’s a long-term catalyst as well: driverless vehicles. Consider that by 2030, 25% of global miles traveled will be shared, according to The Boston Consulting Group, and the autonomous market will be a $7 trillion business by 2050, according to an Intel report. As the market shifts to fleet ownership, rather than individual consumers, Goodyear could leverage its physical-store tire services to sign partnerships with fleet owners, which could become a lucrative business.

Granted, the driverless-car future is an uncertain one, but one thing is certain: Tires, and other products associated with driverless cars, will become much more complex. That means growth — long-term growth — for Goodyear if it can leverage its distribution network, innovative tires, and service bays to carve out its place in the market.

Top 5 Tech Stocks For 2018: Amphenol Corporation(APH)

Aphria (TSE: APH) is an early leader in Canada’s high-growth cannabis industry. With a market cap of $2.4 billion, Aphria is the second-largest cannabis company in Canada behind Canopy Growth Corp’s (TSE: WEED) $6.6 billion.

Shares of Aphria are traded on the Toronto Stock Exchange under the ticker symbol APH. Shares are also traded on US, OTC (over-the-counter) markets under the ticker symbol APHQF.

If there is one stock to own to profit from the cannabis revolution, Aphria is the choice. Let me explain…

Aphria Is Benefitting From A Legal Monopoly Aphria won the cannabis lottery back in 2014 when it received an exclusive permit to grow and sell cannabis from Health Canada, the regulatory agency responsible for issuing permits.

At last count, more than 1,000 companies have applied for a license. But as it stands, Health Canada has only issued 93 permits — and Aphria is one of the lucky recipients.

This exclusive permit gives Aphria two powerful and sustainable competitive advantages. First, it gives Aphria a huge head start on the competition. Second, it will protect Aphria from new competition.

Health Canada will issue more permits in the next few years. But it is deliberately restricting the number of permits to encourage young cannabis companies’ profitability, as this will help to remove illegal cartels from the cannabis trade.

Aphria Is Constructing A 1 Million Square Foot Greenhouse After securing its exclusive permit, Aphria quickly turned its attention to building one of the largest cannabis greenhouses in the world. The company’s 1 million square foot, state-of-the-art cannabis greenhouse will be one of the largest in the world when completed.

This new greenhouse positions Aphria to be the number one low-cost provider of cannabis in Canada — and eventually the world as it continues expanding into international markets.

The final phase of the project is projected to be completed this summer.

Top 5 Tech Stocks For 2018: Boeing Company (BA)

I was one of many in the business media writing about Boeing Co’s (NYSE:BA) stellar first-quarter earnings April 25. Boeing delivered adjusted earnings per share of $3.64, 41% higher than the consensus estimate. While we’re on the subject of beats, its free cash flow was $2.74 billion, 84% higher than analyst expectations.

“Well it’s not every day that a mega-cap company beats consensus by 40 percent,” Robert Stallard, an analyst with Vertical Research Partners said in a note to clients. “The wall of cash that the company is generating makes it hard to be absent from the stock.”

Indeed.

Based on an enterprise value of $196.4 billion and a trailing 12-month free cash flow of $12.6 billion, Boeing has an FCF yield of 6.4%, a perfectly decent yield for a company that’s firing on all cylinders at the moment. Here’s what I had to say about Boeing in April a couple of weeks before earnings:

“Now that I’m back on Boeing wagon, I do believe that Boeing stock could deliver 20%-25% compound annual growth over the next five years,” I wrote April 10. “If it does, a $1,000 stock price is not out of the realm of possibility.”

After its strong first quarter, I have no doubt it’s possible by 2023.

Top 5 Tech Stocks For 2018: Phillips 66(PSX)

Phillips 66 (NYSE:PSX) is a welcome breath of fresh air in the energy space. That’s because while many energy stocks were slowing dividend growth down to a trickle during the oil-price collapse starting in summer 2014 – or even cutting payouts – Phillips 66 has kept the income pipeline flowing.

Namely, since 2014, this refiner and midstream company has juiced its dividend by nearly 80%, including a substantial 11% hike last year.

PSX should have plenty of ammunition for another dividend increase come early May, when it typically makes an announcement. That’s because the company reported yet another excellent quarter a couple months ago that beat the pants off analyst estimates – profits of $1.07 per share were well ahead of the consensus estimate of 86 cents.

But the spending won’t end there. Phillips 66 also plans to spend $500 million more on capital expenditures in 2018 than it did in 2017, which should fuel growth over the coming years.

Top 5 Tech Stocks For 2018: Brookfield Renewable Powerr Fund(BEP)

When investors are looking at the energy industry today, there’s a lot to consider. Volatile oil prices can make big oil stocks risky, changing utility markets have hurt formerly safe utility companies, and even natural gas isn’t the profitable business it once was. But renewable-energy production around the world is growing, and companies that own renewable assets can generate consistent cash flows capable of funding dividend growth for years to come.

One of the best dividends for in-the-know investors is Brookfield Renewable Partners, a yieldco that owns 16,000 megawatts of generating capacity around the world. Eighty percent of that capacity is hydropower, but the company is adding more wind and solar assets after acquiring a 31% interest in TerraForm Global and a 16% interest in TerraForm Power (NASDAQ:TERP).

What’s unique about Brookfield Renewable Partners is that it’s not as tied to the idea of issuing stock to fund acquisitions as many yieldcos have been in the past. Instead, it expects to grow its dividend 5% to 9% annually and use any excess cash from the business to grow cash flow organically. If you look at the dividend over the past decade, you can see that the strategy has resulted in steady growth:

Energy markets can be volatile, but a renewable-energy company like Brookfield Renewable Partners usually buys projects backed with long-term contracts to sell energy to utilities under a set rate. Yieldcos that can do that well will be big winners for investors, and that’s why Brookfield Renewable Partners is a great dividend stock today.